DuPont Chair & CEO Ellen Kullman in conversation with Business Today Editor Chaitanya Kalbag. Edited excerpts:
Q. Do you think the India US CEO forum you are a member of has managed to get things moving a bit in terms of more positive attitude towards trade with the US? There is a feeling that there is huge amount there that has not been tapped.
A. It is very important to get things on the table to understand issues that exist on both sides, across all industries. I am active, for instance, in agriculture and biotechnology. We believe that an open framework in science in genetically-modified organisms should allow a country to make good decisions around their deployment. We have the brinjal situation in India. We need to understand where the issues are and bring information forward and figure out how we work together. These kind of forums really get at the big issues and help get them on a path that make a better outcome for both of us in the future.
Q. On genetically modified crops, there seems to be a very strong knee-jerk reaction in India. For example, on companies that might want to bring GM crops and what effect it will have on peoples' health…
A. There is lot of misinformation around there and that creates fear and hence resistance. It is up to us to work with the government and NGOs and bring facts and understanding - it is being used around the world very successfully. It is about the dialogue and it is about bringing information, data, history that we have. I believe that the impact on creating higher levels of nutrition, higher food and lower utilisation of toxic chemicals with new chemicals…These will create more food for the future. So, obviously I am a believer of technology. People have to accept it, governments have to accept it, if it has to be successful. We have to accept it and work with the people and governments towards that end.
Q. How much do you think India is going to be able to help DuPont in building research capabilities, such as in materials like Kevlar*? What kind of skill set deficiencies you face in getting the right kind of people here?
A. We are trying to build a material science lab and our Kevlar* ballistics is one of the capabilities we are going to be putting there. We have been very successful in recruiting talent. What we have found is that we need to localise our application development around these key materials and work with the local companies to create different applications, stronger capabilities, or different modes of construction for Kevlar* that create higher protection. That has to be done in India and that is a big part of the investment we have put in place in Hyderabad.
Q. Is DuPont's spend on research is as good as it should be or it should be higher?
A. We spend about $1.4 billion a year on research development. In 2010 three quarters of our R&D spend goes to projects specific to answering the problems in mega trends, towards higher crop yields or more effective and efficient crop protection products, or performance plastics in place of metal in automotives to get higher fuel economy or developing alternative energy sources, or products and solutions that will protect people & environment.
Q. In India, it is really tough setting up something like a solar water heating system. The biggest challenge for a country of this size, with electricity problem, is getting solar electricity to be affordable enough and that is not something anyone seems to have cracked.
A. You are right. We see a lot of work going on around reducing the cost of the solar cell itself, and we have seen those prices come down over the last few years but what has not changed is the cost of installation. I have put solar on my house and I can tell you even in the US, I have had a lot of issues in how I got it on the roof, working with the state on some of the incentives. It was a lot of work and it needs to be a lot simpler. It is important to get an understanding of what our customer is facing, and that is part of the opportunity that exists.
Q. You took over as the Chair and head of the board at a very tough point in the country's economy. …. Can you give some indication on what it has been like to pull it through?
A. When the global financial crisis hit, we really needed to get all our employees across the world focused on what they can control - interactions with customers, cost, working capital. We created a lot of capabilities in understanding the levers around generating cash and the earnings that we needed in a very, very difficult economic environment. In 2010 there is a very big focus on the customer. Why is that important? Well, in 2009, even though we were focusing on cost and cash a lot, we chose to focus also a lot on our new product introductions. We launched 1,400 new products in 2009 and that was more than what we did in 2008, and that connection to the customer, coming out of the financial crisis, became very important for us - helping them learn about our new products, apply the new products, positioning us for when the economy and markets return. That was a really big push and helped us to perform.
As the economy recovers, new products allow us to engage with the customer, differentiate us from competitors. Last December we said, between 2009 as the base year and 2012, we will grow our top-line 10 per cent compounded annually and we will grow our bottom line 20 per cent compounded annually. As we come through this year, we are a little ahead of that curve. And now the economy has recovered, we have seen more automotive sales, some sectors are really strong. (For DuPont), it is about connecting to that customer, bringing our science and innovation and our new products to bear to help differentiate us in the market place.
Q. Your margins have been under pressure and fallen quite a bit over the past few years, how does that get better for a company of DuPont size, e.g., the India part. One gets the feeling by talking to other US corporations, they have started to think more globally in terms of spreading their R&D cost, even their trading cost, so that they get their margins better. Is that something you are thinking of?
A. Yeah, I think the mix of our business has changed dramatically over the last 3-4 years. Agriculture has become a much larger part of our business. Once we get into 2011, you will see more normalised growth and you will see stabilisation and improvement in margins as these new products introductions and volumes will take growth… It is a focus and an area….you gotta take the crisis out of it, as volumes drop as heavily as it did, margins will drop as well, it is just simple math.
Q. Your India trip coincides with President Obama's visit. There is a strong feeling on the Obama administration being anti-business. Companies are very upset the way regulations are brought in. Do you feel that the US government policies are making it very difficult for companies of your size and your breadth to be successful and big?
A. You have to discount a lot of the rhetoric, it is mid-term election in a week-and-a-half and everybody talks about lots of things that do not matter, there is a lot of misinformation and half-truths running around. If you think about Obama coming to office during the global crisis and getting the stimulus money to create some opportunities, they ran into challenges, into really getting the money spent on creating employment. They are understanding and getting better at it. They will not be able to spend the stimulus money as they thought they would by the end of this year or next year and that is frustrating for everyone. You know, what he is trying to do is to create a dialogue with business and he has a very strong opinion about things, obviously like healthcare and all that.
The most important thing is that business has to be at the table, business needs to be engaging and we need to be talking about what is important for us to be successful. I am a big believer that trade is really important for our country and the globe, and that is how science and innovation can help solve some of these problems and it has to be protective in various geographies and move around the globe and businesses have to step up to help solve those problems.
Q. DuPont has 13 businesses, do you feel what is more central to you in terms of growth there is a very strong chance that the US economy might not take off strongly as it is expected to?
A. When you look at our portfolio of businesses and markets where we operate we have places of strength where innovation can bring great opportunities. In agriculture and nutrition, whether it is hybrids that yield more or genetic modification or crop protection products that create more efficacy with less impact there are great opportunities there and something where we are focused around the world.
In safety and protection there are great opportunities. It is on in clean technologies to create better environmental footprints for industrial plants, it is about Kevlar* protectors responders. There is a broad way of products and services that is very relevant in today's environment. If you look at electronics and PV, which has had such an upsurge in the last few years, the cost will get better and the paybacks will get shorter. Light-weighting, plastics, biotechnology and industrial science are great opportunities for us. Our products are placed very well, will have more growth than GDP because of the growing population, because of the growing changes in the world. I am very excited about the next few years and the science we are going to bring to the market place.
Q. In your experience, the way things have gone in your career and so on, what do you think it takes to not have this kind of categorisation or pigeon-holing on how women do in senior structures?
A. We all have our experiences and every time there is a successful woman, whether in an entrepreneurial role or in a company, it helps build a better history for the future. At the end of the day it is about bringing all the talent across our population; talent does not look at gender or race. I see a lot more acceptance for gender in the work place. I see it in India. There is movement and there is momentum and part of your forum is going to be a great way to showcase the women doing very well. It is communication around success that makes people sit up and take notice and think about "gee, maybe my manager is a woman and should be in that group" as she is great, is always good.
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